Six Flags is being accused of misrespresenting the state of its parks leading up to its $8 billion merger with Cedar Fair.
A federal class-action lawsuit, filed last week by the City of Livonia Employees’ Retirement System, alleges that Six Flags suffered from “chronic underinvestment” and cut costs by slashing employee headcount. Six Flags is being accused of hiding the fact that it “required a massive, undisclosed capital infusion to turn the company around.” The lawsuit states that Six Flags’s merger statement with the SEC “negligently prepared” and did not represent the true state of the company’s assets.
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“Legacy Six Flags had for years deferred or foregone basic park maintenance, operation improvements, infrastructure repairs, and ride design and development updates,” reads the complaint.
The lawsuit states that Six Flags’ stock was priced at $55 per share on the day of the merger. Since then, share prices have dropped roughly 64%, and a sharp drop that has investors feeling the heat. A November 7th press release from Six Flags shares that the company had another dire quarter, with losses totaling $1.2 billion over three months.
